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26 January 2009

The arrival of the Obama administration will not fundamentally alter the course of military expansion accelerated during the Bush era. The origins of these policies do not lie uniquely in neoconservative ideology. While the election of President Obama may offer new opportunities for progressive forces to delimit the damage, their space for movement will ultimately be constrained by deep-seated structural pressures that will attempt to exploit Obama to rehabilitate American imperial hegemony, rather than transform it.

Indeed, the radicalization of Anglo-American political ideology represented by the rise of neoconservative principles and the militarization processes of the 'War on Terror', constituted a strategic response to global systemic crises supported by the American business classes. The same classes, recognizing the extent to which the Bush era has discredited this response, have rallied around Obama. Therefore, as global crises intensify, this militarization response is likely to undergo further radicalization, rather than a meaningful change in course. The key differences will be in language and method, not substance.

Obama and National Security: “It’s the Oil, Stupid!”

This became increasingly clear as Barack Obama’s administration appointees became known – individuals whose political and ideological positions are largely commensurate with neoconservative ideals particularly on security matters, and whose social and intellectual connections link them to neo-conservative think-tanks and policy-makers.

A glance through Obama’s national security team also raises eyebrows, but we should focus on his selection of former Marine General Jim Jones as his National Security Advisor. Jones was previously appointed to the NATO post of Supreme Allied Commander Europe (SACEUR) and Commander of the US European Command (COMUSEUCOM) under the Bush administration. The thrust of Jones’ imperial vision of US national security can be seen from a UPI article describing his work in 2005:

“NATO’s top military commander is seeking an important new security role for private industry and business leaders as part of a new security strategy that will focus on the economic vulnerabilities of the 26-country alliance. Two immediate and priority projects for NATO officials to develop with private industry are to secure the pipelines bringing Russian oil and gas to Europe… to secure ports and merchant shipping, the alliance Supreme Commander, Gen. James Jones of the USMarine Corps said Wednesday… A further area of NATO interest to secure energy supplies could be the Gulf of Guinea off the West African coast, Jones noted... Oil companies were already spending more than a billion dollars a year on security in the region, he noted, pointing to the need for NATO and business to confer on the common security concern.”

In summary, Jones’ national security strategy privileges US military control over regions containing substantial underexploited oil and natural gas reserves, in Africa’s Gulf of Guinea, the Black and Caspian Seas, and the Persian Gulf. This drive also allows the US to consolidate European dependence for its energy security on NATO, thus solidifying EU support of the wider US geostrategy to control global energy resources and transportation routes.

Obama and the Economy: Déjà vu?

As for Obama’s ambitions for tackling the financial crisis, even a scathing New York Times editorial noted that President Obama’s economic team, put together to tackle the economic and financial crisis, consisted of the very same people who had “played central roles in policies that helped provoke today’s financial crisis.” These include Tim Geithner who as president of the Federal Reserve Bank in New York “helped shape the Bush administration’s erratic and often inscrutable responses to the current financial meltdown, up to and including this past weekend’s multibillion-dollar bailout of Citigroup”; and former World Bank chief, Larry Summers, who “championed the law that deregulated derivatives, the financial instruments – aka toxic assets – that have spread the financial losses from reckless lending around the globe.”

Obama and the Transnational American Business Class

One needs to look beyond the rhetoric to get an idea of what Obama really means for the world. Analysis of Federal Election Commission data on the largest financial donors to both the McCain and Obama presidential campaigns reveals that they were almost entirely sponsored by the same banks, financial institutions and corporations (except Obama received significantly more corporate financing than his rival McCain). This suggests that US policies have, and will continue to, broadly represent the insecurities and interests of Anglo-American capital – and further, that American business classes actually favoured Obama and provided him the finances and expertise to produce a power-house media and publicity campaign.

Obama Shuts Down ‘War on Terror’… Not

So what should we make of Obama’s opening measures, almost as soon as he was inaugurated as President, to close Guantanamo Bay, de-legitimize torture and challenge CIA practices of extraordinary rendition? Firstly, we should of course welcome any such public condemnations of these practices, particularly by the new American President. But this should not blind us from critically examining what Obama’s Executive Orders actually meant.

While around the world, Obama’s measures were interpreted as completely reversing the Bush administration policies of torture, extraordinary rendition and secret prisons – starting with the declaration of the complete closure of Guantanamo Bay – deeper inspection of the details of his Executive Orders suggests, unfortunately, that cries of joy are slightly premature.

First, it should be understood that regardless of what elected US governments have said or left unsaid about the practice of torture by military intelligence services, torture is, and always has been, endemic and officially sanctioned at the highest levels. Declassified CIA training manuals from the 1960s, 70s, 80s, and 90s, prove that the CIA has consistently practiced torture long before the Bush administration attempted to legitimize the practice publicly. This means that what made the Bush era distinctive was not the systematic practice of torture by US military intelligence agencies, but rather the US government’s open and widely known endorsement of such practices, and insistence either on their obvious legality, or otherwise of the irrelevance of law in the context of fighting terrorism.

This means that Obama’s public disavowals of torture do not actually represent the end of the systemic practice of the CIA's traditional interrogation techniques, conducted without public scrutiny for decades. Rather, they portend a sheepish return to secrecy – or in other words, a return to the obvious recognition that open declarations of covert US practices such as torture as official policy are detrimental, not conducive, to US hegemony.

Closer scrutiny of President Obama’s first Executive Orders reveals that they were designed less to transform illegal US military intelligence practices, than to allow them to continue in secret without legal obstruction, by redefining their character (while retaining their substance):

1) While Obama demanded the harmonization of interrogations in line with a purportedly Geneva Conventions-compliant US Army Field Manual, unaddressed revisions to that manual in 2006 – “in particular, a ten-page appendix known as Appendix M” – “go beyond the Geneva-based restrictions of the original field manual.” Indeed, the Manual accepted 19 forms of interrogation and the practice of extraordinary rendition. Further, retired Admiral Dennis Blair, Obama’s director of national intelligence, told a Senate confirmation hearing that the Army Field Manual would itself be changed, potentially allowing new forms of harsh interrogation, but that such changes would remain classified.

2) Obama’s supposed banning of the CIA’s secret rendition programmes did not actually prevent the CIA from extra-judicially apprehending and detaining innocent civilians without evidence or due process, but only emphasized, in the words of one White House official: “There is not going to be rendition to any country that engages in torture.” The problem here is that rendered detainees have already been sent to countries across the EU that do not officially sanction torture, where they were nevertheless tortured. Secret CIA detention facilities have been hosted in, for instance, Poland, and were previously justified by the Bush administration’s State Department under exactly the same notion that Poland did not engage in torture. Even Obama’s own counterterrorism adviser John Brennan, had insisted that rendition is “absolutely vital.”

3) Finally, while purportedly banning the CIA’s use of secret prisons, the prohibitions “do not refer to facilities used only to hold people on a short-term, transitory basis.” Yet without specifying an actual time-limit clearly defining the meaning of “short-term” and “transitory”, Obama’s injunctions effectively still permitted indefinite detention, as long as the CIA would officially re-classify the period of detention as designed to be short-term and transitory.

The end result was a successful re-configuration of the public presentation of US military intelligence practices, coupled with nominal legal caveats permitting them to continue relatively unimpeded – essentially a giant PR exercise. Meanwhile, the vast post-9/11 domestic national security apparatus denying habeas corpus, undermining due process, and facilitating mass surveillance as well as intrusive social control powers brought in by the Bush administration was not repudiated, but retained.

Not One to Waste Time

Abroad, the Obama administration began its first days in office by committing more troops to Afghanistan, intensifying military pressure on Pakistan, stepping-up covert warfare on Iran, and deepening military-political penetration of Central Asia and West Africa. The overarching motivations for these policies are US domination of energy reserves and transportation routes, exemplified in the appointment of oil-obsessed ex-NATO Marine Gen. James Jones as Obama's national security czar. Rather than reversing the pattern of attempting to intensify state power, these policies will severely exacerbate the potential for geopolitical competition and violent conflict.

Regime Rotation: Hegemony Rehabilitation, Systemic Stabilization

After the Bush administration’s record of essentially trampling on any semblance of half-decent PR, leading to the very concept of US world leadership being vehemently opposed or incredulously ridiculed around the world, the arrival of Obama is set to rehabilitate American hegemony and restore some sense of credibility and even respectability to US military and financial power. After Obama's powerful inauguration speech, enough to make even a grown non-American man such as myself (nearly) weep (ok I'm exaggerating, but you get the drift...), Americans and even the entire world, can for the first time in perhaps a decade feel proud and satisfied that all is going to be taken care of.

Yet this sense of jubiliation is symptomatic of the fact that the Obama administration will pursue (and has already pursued) policies of hegemony rehabilitation and systemic stabilization. This will not involve a meaningful change of course, but rather a perpetuation of existing structures in the global political economy. In other words, not changing the system, but protecting it – violently if necessary, but this time with greater attention to PR.

So there will also be sharp ostensible differences with Obama’s predecessors, for instance, greater concern for a multilateralist approach; avowing respect for international law and institutions; reliance on more covert methods of extending influence rather than overt military confrontrations with all those who are "not with us" and therefore de facto "against us"; etc. -thus allowing the US to return to the moral high ground so completely eroded by the Bush administration’s open policies of unilateralism, endorsement of torture, and unabashed violations of international law. In effect, this will involve removing, relabeling or simply concealing practices that have served to undermine US authority in the eyes of its allies, and the world.

The outcome has already been disturbing: while neutralizing and thoroughly confusing progressive social and anti-war movements in and outside the West, the arrival of Obama has allowed the US government to rally unprecedented popular support behind it, for whatever it intends to do.

We will see, in this respect, a marked shift in the language and rhetoric of foreign policy, a return to more diplomatic strategies, as well as military policies couched in the discourse of humanitarian intervention and aid. Unfortunately, for a while, this shift will seem more convincing coming from Obama, as opposed to Bush. More than ever, therefore, progressive movements will need to up their game in understanding and accurately critiquing the new administration’s policies, if they are to prevent processes of imperial militarization from intensifying.

Entitled "Terrorists Working for Western Countries" (24.11.08), it even gives a country-by-country summary breakdown complete with a handy geopolitical world map of the wide arc of these operations. It's a very useful piece from a mainstream national European paper that very effectively summarises the thrust of my research into this unpalatable subject. A shame that the British press is so reticient about such issues.

There are some caveats. Kristin sometimes oversimplifies my geopolitical explanations, and this can lead to serious misinterpretations, such as her rendition of my examination of Pentagon sponsorship of al-Qaeda fighters in the Balkans - she says that the US and NATO helped the Bosnian Muslims against the Serbs, provoking them, and thus preventing peace. This is caricature of my argument, which is more fully fleshed out in The London Bombings: An Independent Inquiry. The Serbs were, in fact, encouraged to act with impunity, and the US Defense Intelligence Agency's influx of mujahideen fighters into the Bosnia predictably aggravated the crisis. Ensuing NATO airstrikes were thoroughly ineffective, and indeed the US, UN and NATO, having accelerated the disintegration of Yugoslavia, acted in concert to do nothing when the Serbs committed genocide against Bosnian Muslims in Srebrencia and beyond.

Anyway. What follows is a basic translation of the piece.

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-Terrorists working for western countries

We have been told that Western countries would do everything they could to eradicate Al-Qaeda in the "war on terror". But Western intelligence has from the 1990s, used terrorists to do dirty work in a number of countries.

By Kirstin Aalen24th November 2008

During the Cold War, the United States was concerned to break the Soviet Union in Afghanistan. The CIA cooperated with Saudi Arabian and Pakistani intelligence to support Muslim guerrilla soldiers - mujahedin - in the fight against the communists.

Thousands of Islamic jihadists (holy warriors) were trained in Osama bin Laden's training camps until the late 1980s. They came from Arab countries in the Middle East and North Africa and was called Arab Afghans. In 1988, Al-Qaida was founded.

So what?

The Soviets gave up Afghanistan in 1989. Bin Laden's men fought in a couple of years of civil war that followed. So against whom should the jihadists now fight their holy war ? The regimes they came from would not tolerate fundamentalist guerrilla fighters in their own backyard.

Western intelligence services saw an opportunity. Documentation proves that British and American players in particular exploited the brutality of Al-Qaeda. "The goal has been to destabilize regions where Anglo-American power wanted to secure control over oil and gas resources," said the British terrorism analyst Nafeez Mosaddeq Ahmed. He has written several books on the subject.

Flown on

In 1991 came three US military agents arrived in Azerbaijan. They arranged to fly in over 2,000 mujahedin soldiers. The job was to create rebellion and remove Russian influence. Bin Laden established an Al-Qaida's office in Baku. It was a base for terrorist actions in the Muslim neighborhood near Russia. After two years of unrest the democratically elected president was overthrown in June 1993. The corrupt Alijev took power. Now western and Saudi oil companies could secure a lucrative contract. Construction of the pipeline oil Baku-Tbilisi-Ceyhan could begin - bypassing Russia.

Moved forward

In 1992 the war in Bosnia began. An official Dutch report authored in 2002 by Professor Cees Wiebes from the University of Amsterdam shows that the Pentagon secretly flew thousands of Al-Qaida soldiers into Bosnia, ostensibly in support of Bosnian Muslims. But these brutal thugs provoked the Serbs so that a peaceful solution was impossible. Nato and the United States supported the Bosnian Muslims with the air strikes.

In 1996, the Kosovo Liberation Army was trained by a high-ranking Al-Qaeda-operative across the border to Albania. But simultaneously, British and US military experts helped.

Macedonia

In 2001, jihadists turned up in Macedonia, now in the guise of the nationalist sister faction, the National Liberation Army (NLA), which was secretly sponsored by Nato and the United States for years as revealed in the Dutch and German media.

Yet Macedonian intelligence reported that Al-Qaeda was also training the NLA in the Kumanovo-Lipkovo region. This information was sent to the CIA and National Security Council in the United States.

Libya

In 1997, the British MI5 anti-terror agent David Shayler revealed that British intelligence in 1995-96 gave 100,000 pounds to Al-Qaida's network in Libya, to plan and complete an assassination of the head of state Col. Mohammar Gaddafi.

Ahmed points out that the other areas where Western covert operations have used al-Qaeda terrorists include Algeria, Egypt, Chechnya (see Graph) and even the Philippines. These case studies show how the activities of Islamic terrorist groups linked to Al-Qaeda through training, money, weapons and fighters have been sponsored by the Anglo-American alliance. "Either by direct or indirect support through state intermediaries. The overall purpose has been to secure control over raw materials, especially oil and gas," said Nafeez Mosaddeq Ahmed.

===translation of text in Graph:

KOSOVO 1996-99:

Kosovo Liberation Army (KLA) was financed by the heroin trade from Afghanistan and from Osama bin Laden. Many soldier-mercenaries were trained in terrorist camps in Afghanistan. According to Interpol, a KLA unit led by one of bin Laden's senior men, probably Mohammed Al-Zawahiri, was a brother of bin Laden's right hand, Ayman al-Zawahiri.

TRAIN: From 1998 the KLA also trained and armed by NATO. British and U.S. experts helped in the training of Tropoje in Albania.

PURPOSE: The British and the Americans used the KLA to destabilize Kosovo and the increase ethnic animosity. They would gain control of the land areas that could open the way for an oil pipeline via Bulgaria, Macedonia and Albania, except Russia and Iran.

LISTED: This happened despite the fact that the KLA in 1998 was put on the U.S. list of terrorist organizations.

ALGERIA 1992-99:

GIA: Early in the 90s emerged the Armed Islamic Group (GIA) - strong in Algeria and with close ties to Osama bin Laden in Sudan. Throughout the 90s committed a series of atrocities in Algeria, which led to 150,000 civilians killed.

REVELATIONS: In 1997 it was revealed that the massacres took place in cooperation between the GIA and the Algerian etterret-business service and military. Western regimes denied the connection, but several whistleblowers claimed that they have known about this connection.

SALE: Sunday Times and Reuter reported in 2000 that Britain sold a large batch weapons to Algeria. U.S. and Algerian military increased their cooperation in 1999.

PENTAGON: A Dutch official report revealed in 2002 how the Pentagon leased Islamic jihadists to fight for Bosnian Muslims.

BOSNIAN PASS: Osama bin Laden had Bosnian passports in 1993. He held meetings in Zagreb in Croatia for Arab-Afghan leaders who were Al-Qaida-emissaries in Bosnia.

WEST: the United States and Britain supported the right nationalist President Alija Izetbegovic to sideline and defeat the multi-ethnic policies of popular rival Bosnian Muslim leader Fikret Adbic. This gave the green light to the fragmentation of Yugoslavia. U.S. and NATO bombers contributed to this.

CHECHNYA 2000:

RUSSIA: Key Chechen cooperation in 1999 with high-ranking Al-Qaida operatives about attacks in the Caucasus.

USA: By the summer of 2000 American private security firms armed al-Qaeda-infiltrated Chechens and their Islamist allies to make rebellion in the region and lead holy war against Russia. The U.S. intention was to destroy a Russian pipeline.

AZERBAIJAN 1991-93

AGENTS: Three agents from the U.S. military flew in at least 2,000 al-Qaeda fighters from Afghanistan to Baku in Azerbaijan. Bin Laden's Al-Qaeda established an office in the city, as a base for terrorism in several areas.

USED TO: Hired fighters made rebellion to reduce Russian influence in the country. Elected president Albufas Eltsjibej fled in June -93. In came Heidar Alijev. Several major oil companies supported the coup.

GOALS: Britain's BP led a consortium of Western and Saudi oil companies that would secure a major contract. In the signed to build an oil pipeline from Baku through Georgia to Ceyhan in Turkey, free from Russian control.

LIBYA 1995-97:

In 1997, MI5 anti-terror agent David Shayler revealed that the British MI6 intelligence agency in 1995-96 paid 100,000 pounds to Al-Qaida's network in Libya so that the terrorists would assasinate country's head of state. The operation failed, ended up under the wrong car, killing six innocent Libyans. The British government denied that it was involved, but two French intelligence experts documented that MI6 in the murder plot had hired bin Laden's highly trusted man, Anas al-Libya. He is on the FBI's "Most Wanted" list for the attack on the U.S. embassies in Africa in 1998.

MACEDONIA 2001:

GUERRILLAS: KLA soldiers went on to form the NLA in Macedonia. At one time, the insurgents were surrounded by the Macedonian security forces, but were rescued by NATO and the United States, though their spokesmen denied this. The news was leaked in Dutch and German media in June 2002.

REPORT: Macedonians reported to the CIA and National Security Council that Al-Qaida had trained the NLA in the region. Received only a polite response from U.S. intelligence.

EGYPT 1997:

In the first half of November 1997 the CIA sent a man called Abu-Umar Al-Amriki to Osama bin Laden's close allies, Ayman al-Zawahiri, in Peshawar, Pakistan. There was a deal made between the Egyptian terrorist leader and the CIA. It was that al-Zawahiri would get 50 million U.S. dollars to ensure that U.S. forces in Bosnia-Herzegovina were not attacked by Islamic mujahedin. Egypt would in turn be able to use the money to "to rule over Egypt." Some weeks later, in December 1997, the al-Zawahiris organization, Al-Jihad, the terrorist attack in Luxor.

MOHAMMED ALI:

Was a double agent for Al-Qaida and the CIA / FBI. He was sent in 1984 by al-Zawahiri to infiltrate the CIA. He joined the U.S. Army and worked at the Special Warfare Center in Fort Bragg, where he stole a manual-fighting techniques. He was among other terrorists who attacked the World Trade Center in New York in 1993, but was not sentenced himself. Also under the name of Abu-Umar Al-Amriki (American). Sent by the CIA in 1997 to broker deal with Al-Zawahiri.

Osama bin Laden:

Lived in Afghanistan in 1984-89 and was one of Al-Qaida's leading theoreticians.

1989-91: In Saudi Arabia, but his harsh criticism of the authorities meant he had to go into exile.

1992-96: Ran Al-Qaida from Khartoum in Sudan.

From 1996: Back in Afghanistan. Established a close cooperation with the ruling Taliban government until the US-led invasion in October 2001.

FINANCING: Bin Laden-financed Al-Qaida in part with money from their own family wealth, and partly from funds collected. But in 1994 when he lost his Saudi citizenship and had all their accounts frozen by the bin Laden family dynasty, he lost the ability to generously support his jihadists.

MUJAHEDIN: Different groups of mujahedin - Muslim guerrilla fighters - were supported by among others the United States, Saudi Arabia and Pakistan to fight against the USSR in Afghanistan (1979-89). Saudi Arabian Osama bin Laden built the Tora Bora plant with support from Pakistani intelligence (ISI). Here he could - inspired by Palestinian jihadist theoretician Abdullah Azzam and supported by Egyptian aid Ayman Al-Zawahiri - recruit and train fighters in the jihad (holy war). They also ran an al-Kifah Center (aid office) for jihadists in Peshawar in Pakistan. A number of similar assistance centers were created in the U.S. and Europe.

Al-Qaida:

In Arabic, short-hand for "database". Was founded 17 May 1988 by Osama bin Laden and his closest colleagues.

LEARNING: Al-Qaida offered in their first year training to 10,000 to 20,000 volunteers in several camps in Afghanistan and Pakistan. They were Arab Afghans, given lessons in fighting techniques, weapons handling and use of explosives in addition to ideological training.

8 January 2009

Natural Gas, Palestinian Elections, and Israel's Subversion of the 'Peace Process'Israel claims it is fighting in Gaza to stop Hamas rocket-fire against Israel, the continuation of which constituted a flagrant breach of the six-months ceasefire. Hence, the objective of the military operation is limited by the aim of putting an end to the rocket-fire.

In fact, the current outbreak of violence cannot be understood without analysing the asymmetries in military violence between the two parties; the structural dynamic of the conflict in the context of the character of the Israeli occupation; the central role of recent discoveries of substantial natural gas reserves in Gaza; and joint Anglo-American and Israeli attempts to monopolise the lucrative (and strategic) energy resources through a political process tied to a corrupt Palestinian Authority run by Mahmoud Abbas’ Fatah Party.

Hamas’ unprecedented victory in democratic elections in 2006 fundamentally threatened these plans. Operation Cast Lead, the concurrent Israeli military venture, was operationalised as a war plan in early 2008, and already finalised in detail as far back as 2001 by Israeli military intelligence. Its execution in late December 2008 into January 2009 is designed to head-off not only domestic Israeli elections, but more significantly, the outcome of further incoming Palestinian democratic elections likely to consolidate Hamas’ power, to permanently shift the balance of geopolitical and economic power in its favour.

The long-term goal is the “cantonization” of the Occupied Territories making way for increased Israeli encroachment, and ultimately the escalation of Palestinian emigration.See Media Monitors Network for easy to read version; slightly updated version but with less brilliant formatting is on OpEdNews.

6 January 2009

In the summer of 2008, the Bank for International Settlements (BIS) warned of the danger of another Great Depression rivaling the economic crash of the 1930s. The problem supposedly began with the US sub-prime mortgage crisis, whereby American banks increasingly granted mortgages on less stringent conditions to consumers who could not prove their ability to make repayments. This wasn’t an idle mistake due to insufficient regulation. Governments knew what was happening, and had ample opportunity to stop it. But financial institutions lobbied successfully for the power to lend at whatever multiples they wanted, without restriction. According to former Governor of New York Elliot Spitzer, when states realized the vast extent of corrupt lending practices by banks and tried to intervene to regulate them around 2003, the US Treasury Department unilaterally blocked their efforts.

On the basis of the proliferation of sub-prime mortgages, banks innovated new ‘financial products’ such as derivatives, valued against projected mortgage repayments. These are essentially contracts that gamble on the future prices of assets, thus deriving their value from primary assets, such as currency, commodities, stocks, and bonds. As more people with lower incomes obtained subprime mortgages, increasing volumes of bad debt were repackaged and re-sold globally, on the basis of which even larger amounts of credit and thus new loans were flooded into worldwide markets.

“Risk?... What Risk?”

Veteran derivatives trader Nassim Nicholas Taleb, Distinguished Professor of Risk-Engineering at New York University’s Polytechnic Institute, confirms that banks routinely certified such transactions as solid and risk-free using quantitative models which, in reality, simply concealed the actual scope for risk and its potential consequences. This allowed them to create extremely risky financial instruments, slap a certification of safety over them, and sell them on for stupendous profits. In turn, these products were fraudulently insured by other financial companies, which used the opportunity to charge exorbitant fees. But these ‘insurance’ firms simply did not have the assets to cover losses in the event of a real default.

Consumers increased their spending on the basis of the security of their houses, while financial institutions accelerated their lending on the basis of rapidly proliferating mortgages, together contributing to rising prices and a mounting inflationary property and consumer bubble. This frenzy of spending and lending created a veritable bonanza of debt-based ‘virtual growth’. It had nothing to do with a real surplus derived from increases in productivity, but rather from a monetary system based on the ability to continually borrow (and effectively create out of nothing) cash that in real terms did not yet exist, except as the expectation of repayments on loans.

Worldwide sales worth trillions of dollars of these dodgy financial instruments distributed risks across multiple financial markets. Moreover, the hierarchical structure of the global financial system, dominated by New York and London, meant that debt-based profiteering at the core of the system radiated outwards and downwards to more peripheral countries tied into the system through their receipt of loans from the core and/or purchases of derivatives.

Indeed, thanks to the monumental profits and concomitant phenomenal growth accrued through this process, US and British financial institutions jubilantly accelerated lending to Europe, Asia, and countries in the South, creating an entrenched global web of debt, credit and financial profits. Thus, when the defaults started in the US, the crisis radiated outwards and downwards, and is still doing so.

Was ‘Structured Finance’ Structurally Sound?

So the Crash of 2008 had multiple interwoven causes – but it’s important to understand how these were related. One major background cause is the nature of the monetary system and the very existence of interest. All money is created through governments borrowing from banks on interest. This means that repayments of the debt are larger than the original size of the loan. For the loan to be repaid, more money needs to be created which means more lending on interest. The result is that over the long-term, as the money supply increases, the value of the currency depreciates and thus costs of living rise. There is therefore a long-term structural tendency toward rising inflation. This contributes to the devastating nature of capitalism’s boom and bust crises - at some point the debt-bubble is patently unrepayable and has to collapse.

Yet pre-Crash inflation also had another specific cause in the 21st century, namely, rocketing fuel prices; fuel prices rose from 2001 through to 2008 primarily due to supply-demand issues (not purely due to financial speculation although this played a role), most likely as a consequence of peak oil. According to an October 2007 oil market report by the Energy Watch Group in Berlin, world oil production peaked in 2006. The excessive energy costs fed directly into the entire system, raising cost of transport, food, living and basically everything, which thus also placed structural pressure on banks to increase interest rates to cover their own costs. Experts like petroleum geologist Colin Campbell, who worked for companies like Shell, BP, Esso and Texaco, confirm we are probably now on what is known as the “undulating plateau”.

The plateau begins when peak oil induces massive price shocks contributing to economic recession. The recession in turn reduces consumption, lessening the strain on resources and precipitating a collapse in fuel prices. Lower prices create new space for renewed consumption and economic recovery. This “undulating plateau” is a period of major price fluctuation, which could last from 5 to 10 years before oil capacity limits are permanently breached and we arrive at the era of irreversibly scarce oil supplies and high prices.

The corrupt lending practices of banks interacted with the impact of rising inflation. While sheer greed partly explains this behaviour, it’s a bit more complicated than that. The structural fragility of the global financial system had been obvious since the dot com boom and bust in the late 1990s. The capitalist imperative to keep growing by continually generating profits is structural - i.e. capitalism systematizes human greed and makes it necessary for economic survival. If the financial sector didn’t find a new outlet for investment to continue growing the economy, the economy would contract. If the financial sector was to continue growing, it had to find a new previously untapped market for debt-credit creation and the associated milieu of ‘financial products’ - this new market consisted of ‘low-income’ people and even the struggling middle classes, namely, the majority of the population. The very imperative to grow - simply to avoid banks and corporations losing profits, contracting and then failing - pushed banks into even more corrupt lending practices, which combined with long-term structural energy and monetary constraints, creating a bubble of virtual growth that was bound to implode at some point.

How to Create a Quadrillion Dollars ‘Ex Nihilo’

So the housing markets were only the underbelly of a much larger beast. So-called “structured financial” products served as mechanisms to generate massive profits for elite investors by deepening levels of debt. This leads back to the structural issue of the monetary system, based on fractional reserve banking - that is, the creation of money from nothing, simply by entering numbers into a computer, as credit charged at interest. Traditionally, banks could create credit or debt-money up to 12 times what they held in reserve.

But this changed with the worldwide brokering of the New Capital Accord in 2000 by the Bank for International Settlements. The Accord effectively allowed banks to obtain unlimited leverage – the ability to create debt-money at any multiple whatsoever, with no meaningful regulation. Financial institutions exploited this new found power to subjugate the population to an enlarging and unrepayable debt that was the basis of self-multiplying profits for financial institutions.According to the Bank for International Settlements, by late 2008 total derivatives trades exceeded one quadrillion dollars, that is, 1,000 trillion dollars. This is an insane quantity that has no relation to the real economy - the total GDP of all the countries in the world is only about 60 trillion dollars. It is a quantity generated by the creation of money out of nothing as credit – that is as debt-money requiring repayment on interest.

Worse, no one, not even in the leading financial institutions, really understood exactly how this situation had come about. As of 2004, for instance, 90 per cent of financial transactions in the US were not properly recorded. This was, in effect, a giant, globalized casino through which financiers generated stupendous profits out of thin air, all on the basis of the proliferation of massive debts that inherently could never be repaid. This ‘house of cards’ was therefore uniquely vulnerable to collapse. The housing crisis was just the trigger, threatening to unravel the entire edifice of debt-driven profiteering.

Tackling the “Triple Crunch”

Ultimately, the global financial crisis of 2008 signifies the deep-seated failure of our conventional socio-economic, ethical and political models. But the ‘credit crunch’ is only one face of global crisis. We also face two other interrelated major ‘crunches’ this century – 1) oil and energy depletion, with evidence that world oil production already peaked in 2006; and 2) dangerous global warming, with evidence that current rates of increase of fossil fuel emissions will lead to a rise of 2-4 degrees Celsius, permanently disrupting Earth’s ecosystems.

The mantra that ‘there is no alternative’ is untenable: neoliberal capitalism encourages forms of unthinking consumerism and unrestrained corporate empowerment that are together destroying the Earth’s ecosystems and depleting our energy resources beyond repair. The unprecedented convergence of global economic, ecological and energy crises threatens the viability of industrial civilization, and proves the urgency of immediate social structural reforms.Such reforms will have to deal with the following structural features of the current global system, among many others:

1) Global inequalities in ownership of productive resources: Currently around 5 per cent of the world population owns the world’s productive resources. The rest of the population are separated from the means of production, and are forced into various forms of wage labour or servitude to survive. This requires extensive new thinking on how to increase access to, and ownership of, productive resources on the part of the majority of the world population, while respecting individual liberties and private enterprise.

2) The ideal of unlimited growth: As Nobel Prize-winning economist Amartya Sen argues, economic development should be directed not at unlimited growth for its own sake, but at sustainable growth specifically for the purpose of catering for the needs and well-being of the majority of people. The IMF’s own data proves that neoliberal capitalism has led to increasing concentrations of ever-larger profits among a smaller minority of the world’s population, with the percentage of benefits from growth to the poor shrinking, creating greater poverty and inequality all round.

3) Fractional reserve banking and the New Capital Accord (2000): The interest-based monetary system subjugates the real economy to a form of unrestrained financial plunder that intensifies debt in order to grow. This means not only monetary reform, but a fundamental decentralization of the economic and financial system based on the principle that the Earth’s resources belong to everyone, and that people everywhere should participate in economic and financial policymaking. This, of course, also means that political power must be increasingly distributed among communities.

4) Materialist fundamentalism: Underlying neoliberal capitalism are philosophical assumptions about life and human nature that reduce the world to nothing more than a collection of physical, disconnected, atomistic, self-interested and thus inherently conflictual units. This reductionist worldview rationalizes unlimited consumption based on the equation of personal happiness with accumulation of material possessions and fulfillment of material desires. There is no room for objective ethical values because such values cannot be readily identified as material objects. Yet clearly these ideological assumptions of capitalism are false – because if they were right, then they would work! Rather, we see that the manifestation of materialism in the global political economy is leading to massive destruction of life, rather than prosperity for all. This means that ideals like social justice and compassion are actually, objectively, more in tune with nature than neoliberals would have us believe.

Civilizational Renewal?

The urgent need for a global alternative is therefore not up for debate. But we should hold no illusions. Things will get far, far worse, before they get better. This is not yet the end of capitalism. On the contrary, the biggest financial players, like Goldman Sachs, JP Morgan, and others, have used their power over states to secure massive bailouts using public funds, allowing them to prevail while hundreds of other financial institutions have fallen like dominos. As the collapse of the financial system pulls down the real economy, shares in giant corporations which actually produce tangible goods and services have plummeted as consumers are clinging to their increasingly empty wallets. Taking advantage of their supreme position, financiers have moved in fast, buying up the cheaper shares and consolidating ownership of production. We are witnessing an unprecedented re-structuring and centralization of economic and financial power.

Yet the system has perhaps another 10-15 years before irreversible collapse as the impact of peak oil kicks in. In this time-frame, as working people are increasingly upset, confused and angry about the acceleration of socio-economic injustice, activists and researchers have unprecedented opportunity to work harder than ever to develop a vision for the future that is just, inclusive and holistic. The time to prove that there are meaningful alternatives is now.

Winner, Premio Napoli (Naples Prize created by decree of President of the Republic), 2003

"International security analyst and consultant who has spent much time looking at how environmental risks and terrorism threaten our eco-security and well-being." -- The Evening Standard's Progress 1000: London's most influential people 2015

"Yes, yes, I know he is one of Them. But they often know things that we don’t – particularly about what we are up to" -- Gore Vidal, The Observer

"Ahmed is that rare breed of journalist who finds stories everyone else either misses or chooses to overlook; he regularly joins up the dots in a global system of corporate pillage... a voice from the genuine left, and one too independent to control" -- Jonathan Cook, former Guardian columnist and foreign desk editor

"If you still need something to worry about, how about a grand conflagration of climate, financial, energy, food, and civil-liberties crises, which might destroy the world as we know it before the century is out?... Forceful and well sourced" -- Steven Poole, The Guardian

"Lucid and persuasive account of how our security mandarins talked themselves into believing we could make quiet, backroom deals with terrorists" -- Bryan Appleyard, Sunday Times

"Disturbing and clearly evidenced... Nafeez Mosaddeq Ahmed traces the unholy games played with Islamist terrorists by the US, and through acquiescence by the UK, flirting with them when it suited and then turning against them" -- Yasmin Alibhai-Brown, The Independent

"Respected terror analyst Nafeez Mosaddeq Ahmed pulls apart the official narrative of 7/7, pointing out its gaps and contradictions... The authorities seem to be unable to answer many of the most basic questions about the 7/7 bombings ... it has taken a study by an academic outsider, Ahmed, to assess the extent of the bombers’ international terrorist connections." -- Editorial, Independent on Sunday

"One of the most illuminating voices in the British media" -- Rob Hopkins, founder, Transition Towns movement

"Nafeez Ahmed’s understanding of the post 9/11 power game, its lies, illusions and dangers, is no less than brilliant. Everyone should read this wise and powerfully illuminating book." -- John Pilger, Emmy and BAFTA award-winning journalist

"A very worthwhile read for policy-makers everywhere" -- Michael Meacher MP, UK Minister of State for the Environment (1997-2003)

About this blog

"posits that in every culture and society there are facts which tend to be suppressed collectively, because of the social and psychological costs of not doing so."

Deep political analysis digs

"beneath public formulations of policy issues to the bureaucratic, economic, and ultimately covert and criminal activities which underlie them."

(Peter Dale Scott, University of California, Berkeley)

On this blog, I engage in deep political analysis in the context of the Crisis of Civilisation – the convergence and escalation of environmental degradation; species extinctions; climate change; energy depletion; food crisis; water shortages; economic instability; inequality and poverty; religious and political extremism; moral confusion; mental illness; and finally, philosophical and epistemological vacuity.

As these crises systemically converge and accelerate, Civilization continues to respond largely with denial, potentially guaranteeing a business-as-usual trajectory toward worst case scenarios. The only viable alternative is to respond through direct confrontation with that which has been suppressed.